A Family Feuds In Texas Over 2 Trust Funds

By ALLEN R. MYERSON

Published: April 8, 1997

DALLAS, April 7—
In a lawsuit that threatens his control of at least four Big Board corporations, several family members have challenged Harold C. Simmons's command of the billion-dollar fortune he has amassed as a corporate raider and executive.

In a court filing here last month, two Simmons daughters say trusts that Mr. Simmons set up for them have been used for his personal gain. They also say that Mr. Simmons, one of the nation's largest Republican donors, pressured them into making what one daughter calls ''illegitimate and illegal'' campaign contributions from the trusts.

Mr. Simmons, the two daughters say, put virtually his entire fortune -- mansions, a Falcon jet and controlling stakes in several companies -- into two trusts. He made these arrangements, they contend in Dallas County probate court filings, to shield himself from creditors, tax collectors and an ex-wife, while enriching himself and evading campaign spending rules.

George Bowles, a lawyer for Mr. Simmons, said that he would have no comment on matters under litigation. In court documents, Mr. Simmons has denied his family's accusations, saying he created the trusts for the orderly transfer of his wealth to his four daughters, including two who are not challenging his control.

Mr. Simmons achieved notoriety in the 1980's for takeover raids on corporations, including a failed bid for Lockheed and a successful one for NL Industries, a Houston chemical company. Although Mr. Simmons has been out of the spotlight in recent years, his investments, besides NL Industries, include the Valhi Inc. holding company; Keystone Consolidated Industries, a wire producer; the Tremont Corporation, a titanium metal producer, as well as a sugar business and Arby's fast-food franchises.

The daughters, Scheryle S. Patigian and Andrea Swanson, and five grandchildren want to remove Mr. Simmons from control of the trusts and have a new trustee appointed by a court. In the court papers, they list several instances in which they say he used the trusts for personal gain and for making hundreds of thousands of dollars in political contributions.

Through his Contran Corporation of Dallas, a private holding company, Ms. Patigian says, Mr. Simmons has paid himself an annual salary of at least $4.4 million a year and arranged for his third and current wife, Annette, to receive this much for the rest of her life if she survives him.

In the late 1980's, Ms. Patigian says, Contran bought more than $1.5 million in jewelry, including a $450,000 necklace and earring set with 150 carats of diamonds, for the current Mrs. Simmons. In 1990, however, Mr. Simmons had Contran give him a bonus large enough for him to buy the jewelry from the company, according to Ms. Patigian.

Ms. Patigian says that Contran has also contributed at least $18 million to the Harold Simmons Foundation. Mr. Simmons, a major philanthropist, has supported medical charities in particular.

In general, Ms. Patigian says in a court filing, Mr. Simmons ''continues to use Contran as if it was his own personal checking account to pay personal living expenses, vacation expenses, personal servant's expenses and political and charitable contributions.''

Ms. Patigian also questions hundreds of thousands of dollars of contributions that Mr. Simmons made from the trust in her name to groups and candidates, mostly Republican and conservative, that she in fact opposes. Some of these contributions were illegal, she says, and many were designed to evade Federal election laws.

Ms. Patigian also lists Contran contributions including $115,000 over several years to Gopac, founded but no longer controlled by the House Speaker, Newt Gingrich, and $5,000 or more to defend Oliver North and John Poindexter, former Reagan aides accused in the Iran-Contra scandal. She makes no allegations, however, that the dealings with Gopac or the Reagan aides were illegal.

The two daughters say that Mr. Simmons forced them to sign blank political contribution letters for him to use for whatever causes he saw fit. Ms. Patigian says he threatened to cut her off from trust income unless she agreed to sign.

According to Federal Election Commission records, Contran, Mr. Simmons and his family have given more than $315,000 to Republicans since 1993. Several family members sometimes gave to the same candidates or political action committees.

Contran itself has given various Republican committees hundreds of thousands of dollars in so-called soft money, which is not subject to legal limits. In Federal campaigns, however, individuals are limited to donating $1,000 a candidate and $25,000 total.

In 1993, the Federal Election Commission fined Mr. Simmons $19,800 for exceeding the $25,000 limit by donating $26,250 in 1989 and $69,926 in 1990.

Mr. Simmons touched off his daughters' suit by asking them last year to let one of the trusts revert back to him. They sought an accounting of the trusts and greater disclosure of Mr. Simmons's activities. When mediation failed last month, they asked the court to remove him from control. A trial is set for this August.

Photo: Harold C. Simmons is known for his takeover bids in the 1980's. (pg. D5)